In the recent weeks, we have seen some aggressive manoeuvres from Broadcom to acquire Qualcomm. Qualcomm has continually rejected the offer as they believed it was severely undervalued at $79 per share or $117 billion.
The motivation behind Broadcom’s takeover bid appears to be the acquisition of Qualcomm’s extensive 5G technology which is going to be one of the most important communications technologies in the next decade.
Unfortunately, Broadcom’s woes don’t end at being rejected by Qualcomm. President Trump has now intervened and effectively quashed the deal by issuing an blocking Broadcom’s proposed takeover and anything “substantially equivalent” to it over concerns that it might “impair the national security” of the country. The order also disqualifies all 15 of Broadcom’s proposed directors for Qualcomm. The move follows a letter from the Committee on Foreign Investment in the US warning the companies that it believed the takeover would pose too great a security risk.
Apparently, if Broadcom acquired Qualcomm it would cut costs at the Qualcomm and weaken its ability to compete against Chinese rivals like Huawei. That, in turn, would let China dominate 5G wireless and leave Americans vulnerable.
Broadcom are now reviewing the order and strongly disagree with the statement that it poses national security risks.